Crow Nation is first to adopt model secured transactions code

The Crow Nation in southeastern Montana recently became the first American Indian tribe to enact the Model Tribal Secured Transactions Act, or Model Tribal Act (MTA). According to the MTA’s supporters, passage of the act is a crucial step in establishing a commercial legal infrastructure that will support economic development on the Crow Reservation.

The MTA provides model legislation that covers a type of commerce called secured transactions. A committee of the National Conference of Commissioners on Uniform State Laws drafted the act over a period of four years, with input from an advisory group of Indian tribes that included the Crow Nation. When the drafting committee completed the MTA in the summer of 2005, the Crow Nation took immediate steps to consider and adopt the act. The tribal legislature reviewed and debated the MTA for several months, from late 2005 through early 2006, and approved it in a 17-1 vote on April 18.

The term secured transactions refers to a category of loans and other extensions of credit that are essential to many business operations. A set of laws called the Uniform Commercial Code (UCC) governs secured transactions and other forms of commerce in all 50 states. However, as sovereign nations, Indian tribes are not subject to state UCC laws and are free to adopt their own commercial codes. As a result, tribal commercial laws vary, and laws governing secured transactions are absent or weak on many reservations. The uncertain legal environment introduces an element of risk that can make outside parties reluctant to lend to tribal members or businesses. By adopting model commercial codes such as the MTA, Indian tribes can achieve a degree of uniformity with state law that reduces financial risks and facilitates relationships with off-reservation lenders.